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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Risk Management

Under the Companies Act, 2013 framework, Arvind Engineering Ltd's board is preparing its report. Which of the following correctly states how risk is addressed in statutory disclosures and responsibilities?

The board's report under the Companies Act, 2013 must include a statement on development and implementation of a risk management policy, covering risks that may threaten the company's existence. Independent directors also check that risk systems are robust, so risk is clearly addressed in the Act.

  1. AThe board's report must include a statement on development and implementation of a risk management policy, including identified elements of risk threatening existence of the companyCorrect
  2. BOnly the audit committee, not the board, reports on risk, in the annual return
  3. CIndependent directors are barred from commenting on risk systems
  4. DRisk is addressed only in the secretarial standards, not in the Act

Explanation

The board's report must contain a statement indicating development and implementation of a risk management policy, including elements of risk that may threaten the company's existence. Independent directors are also expected to satisfy themselves that risk management systems are robust and defensible. The other options contradict the Act.

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